Oil states planning to spend petrodollars in investing in farming

The reported investments are the latest detailed by officials in oil-rich Arab states of the Persian Gulf. Shaken by soaring global food prices, governments here and in fast-growing Asia have started courting countries with promising but underdeveloped agricultural prospects.

 

A Saudi official told Zawya Dow Jones that Riyadh plans to set up a new investment fund to buy agricultural land in other nations. Abdullah Al Shoaibi, a senior official at the Saudi Fund for Development, refused to comment on the dollar amount of the fund.Â

 

Although discussions are still under way about which government body will manage the fund, the new fund will target Sudan, but that it may also buy land in Turkey and Pakistan, as the wheat and rice supply for the domestic Saudi market will be the new fund's initial priorities, Al-Shoaibi was quoted as saying by the WSJ on Tuesday.

 

The Saudi Fund for Development is a government authority that lends money to the developing world. Over the past three decades, the fund has allocated some 27 billion Saudi riyals ($7.2 billion), with seven billion riyals going to agriculture projects, the report said.

 

Arab development officials say that plans to buy underused farmland in other countries will benefit the host nations, as the deals create jobs and transfer new technologies that will make agriculture more efficient in those nations, the report added.

 

Critics of the plans warn that potential investment may not help feed local populations, which are also suffering from today's food crunch. In Sudan, for instance, the United Nations World Food Program currently feeds 5.6 million people.

 

Rashid Ahmad bin Fahd, the U.A.E.'s minister for environment and water, said his government is focusing on closing deals with Sudan, Egypt and Pakistan. No contracts have been signed yet, but the effort is designed "to secure food supplies without being at the mercy of market fluctuations," bin Fahd told WSJ.

 

The U.A.E. and Saudi Arabia, both oil-rich and booming economies, import most of their basic food staples, according to the Common Fund for Commodities, a U.N. affiliate.

 

Both countries have been hammered by soaring prices, especially for food. Saudi Arabia in 2007 imported $6 billion of food, according to the CFC. The U.A.E. imports $4 billion of food annually, according to bin Fahd, WSJ added in its report.